May 17, 2014

Gazprom targets SGX listing

Gazprom seeking a secondary listing in money-friendly Singapore. You always wonder if the quality listings knock on Hong Kong's doors first, while the ones that Hong Kong kicks out then seek Singapore's.

OAO Gazprom, the natural-gas export monopoly, is in talks to list its shares with Singapore Exchange Ltd. (SGX), the Russian company’s spokesman said.
Gazprom is preparing documents for the listing, which may happen as early as July, Sergei Kupriyanov said by phone today. The company wants its depositary receipts to trade round the clock and aims to boost the liquidity of its stock with the listing, the Interfax news service reported today, citing a Gazprom executive it didn’t identify. As much as 7 percent of its shares will trade on the Asian bourse, Interfax said. Bloomberg

Moscow-listed Gazprom has a market capitalisation of around US$95bn.
Although a Singapore listing will be a first for a Russian company, it is likely to be a controversial move because many banks and investors are limiting their exposure to Russian companies, especially state-linked ones, after the country annexed Ukraine’s Crimea region in March.

The US and Europe have already imposed sanctions on Russian individuals and some companies, and have threatened to broaden these if the country interferes with polls in Ukraine later this month.
“They probably want to tap as many pockets of demand in Asia as possible,” said one ECM banker. “If they do it now, it’s going to be cheap [for investors].”

Russian companies have been eyeing Asia’s capital markets in recent weeks in a bid to access a new pool of investors, since some European and US funds have become less willing to take exposure to the name.

Further sanctions and a worsening of the political situation could hurt profits at Gazprom, which announced on May 12 that it would change the terms of its supply contract to Ukraine to require payment in advance for gas supplies, after outstanding debt rose to US$3.5bn.

It said that, if Ukraine did not pay for its June supplies come June 2, no gas would be delivered. The Russian Government owns a 49.34% stake in Gazprom.

If Russia cuts supplies to Ukraine, the European Union is reported to be considering reducing imports of such gas, which would impact Gazprom. However, Gazprom was currently negotiating to supply China with natural gas, which could be concluded this week, Reuters reported.

The SGX led a roadshow in Russia in 2010 to attract Russian companies to list in Singapore, but, so far, none have announced plans to do so. There are not thought to be any technical complications with listing a Russian company in Singapore.

“Singapore is usually quite open to foreign issuers,” said another source.
Russia’s only Asian listing to date has been in Hong Kong, with the US$2.2bn IPO of aluminium producer United Company Rusal in January 2010. That stock closed on May 15 at HK$3.55, far below its IPO price of HK$10.80.

A planned Hong Kong IPO from Russian hydropower utility EuroSibEnergo was pulled in 2011, while proposed Stock Exchange of Hong Kong listings of molybdenum miner SMR, Transcontainer and Kamchatka Gold never came to pass. IFR Asia

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